Packaging Corporation Of America (PKG)

Packaging Corporation of America (PKG+0.7%) completes the acquisition of Boise (BZ+0.2%). All BZ shares not purchased in the tender offer have been converted into the right to receive $12.55/share in cash.

6.6% Boise shareholder Carlson Capital had agitated for a divestment of the paper ops and believed shares could be worth as much as $17/share.

Packaging Corporation of America (PKG) agrees to acquire Boise (BZ) for $12.55 per share in cash, or nearly $2B. The sale is expected to close in Q4, subject to certain customary conditions and regulatory approval.

PCA's containerboard capacity will increase to 3.7M tons from the current 2.6M and PCA will now have a market presence in the Pacific Northwest.

Synergies are expected to generate pre-tax benefits of $105M, to be fully realized within 3 years of the closing, according to PCA management.

Boise shareholders are getting 5x LTM EBITDA for their stock.

BZ closed at $9.96 Friday evening, making the purchase price a 26% premium.

International Paper (IP+1.1%) and Temple-Inland (TIN+42.3%) are in focus after IP's $30.60/share bid was rejected despite being a 46% premium to Monday's closing price. Other packaging and paper stocks rally on calls from bullish analysts that the industry is heading for consolidation: PKG+6.9%, WY+6.2%, BZ+5.6%, KS+4.3%, RKT+3.1%.

Packaging Corporation of America is a producer of container board and corrugated products in the United States. The Company also produces multi-color boxes and displays, as well as meat boxes and wax-coated boxes for the agricultural industry.